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Savings hit to clear credit cards

Savings hit to clear credit cards

5 min read

August 7, 2011

A new poll by ING Direct has found a drop in the average amount set aside by Britons as an increasing number of cash-strapped consumers dip into their savings to pay off credit card debts.

Consumers are also being forced to reduce their spending as they try to reduce debts, the study found.

Britons managed to set aside an average of £1,684 in the first few months of 2011, down nearly £100, according to the poll of 1,300 people.

The survey also found a fall in the usage of credit cards as Britons are struggling under soaring inflation and VAT, rising petrol costs, declining wages and an increase in unemployment.

Richard Doe, chief executive of ING Direct, said: "Since we began tracking the financial behaviour of ordinary Britons in 2009, consumers have been juggling with spending, paying off debt and putting money away for a rainy day.

"While many have reduced their debts, often at the expense of spending and saving, others continue to rely on their credit cards.

"However, the report demonstrates that there is a determination among the public to further reduce debts and rebuild savings, with the latter a growing priority. But in the current environment it may prove difficult for consumers to realise both of these aims."